The Hidden Costs of Hiring Locally or Why Outstaffing is the Smart Solution?

Many companies default to local hiring, assuming it's the simplest way to find and manage employees. However, local hiring comes with a variety of hidden costs — costs that can quickly add up and impact your bottom line. What if there was a smarter, more cost-effective solution?

Outstaffing offers a flexible, global approach to talent acquisition that helps businesses avoid the often-overlooked expenses of local hiring. In this article, we'll explore the hidden costs associated with local hires and explain why outstaffing is a smart solution that can cut labor costs, offer flexibility, and connect businesses with a global pool of talent.

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The Hidden Costs of Hiring Locally

Hiring locally often seems like the easiest way to build your team. You know your market and it's convenient to work with people in the same time zone. However, the costs of hiring locally extend far beyond the basic salary you offer a new employee. Here are the major hidden costs that come with hiring locally:

Recruitment costs

The process of finding the right candidate is time-consuming and expensive. According to a study by Glassdoor, the average cost to hire a new employee in the U.S. is around $4,000. This includes job postings, recruitment agency fees, background checks, and the time spent interviewing candidates.

Training сosts

Even after finding the right candidate, it doesn't stop there. Training new employees requires resources and time. The average company spends around $1,300 per employee per year on training, according to Training Magazine. The ramp-up period for a new hire can range from weeks to months, during which the employee isn't fully productive.

Employee benefits

In addition to base salary, businesses need to factor in the cost of benefits. In the U.S., employee benefits (including health insurance, retirement contributions, and paid leave) typically add 30-40% to the cost of hiring an employee, according to the Bureau of Labor Statistics. An employee earning $50,000 per year is an additional $15,000 to $20,000 in benefits.

Office space and equipment

Hiring locally means providing physical space for your employees to work. Office rent, utilities, and equipment (desks, computers, software) all add to your operational expenses. According to a report by Cushman & Wakefield, the average cost of office space in major U.S. cities can range from $6,000 to $12,000 per employee per year, depending on the location.

Turnover costs

Employee turnover is a costly problem for many businesses. The average cost of replacing an employee is between 6 to 9 months' salary. This includes recruiting, training, and lost productivity. High turnover not only affects finances but also disrupts team cohesion and slows business growth.

Breaking Down the Costs

Let's break down these hidden costs with a simple example. If you're hiring a local employee with an annual salary of $50,000, you're not just paying $50,000. You also need to account for:

• Recruitment costs: $4,000
• Training: $1,300
• Benefits: $15,000 (30% of salary)
• Office space: $6,000
• Turnover risk: Up to $25,000 (if they leave within a year)

This brings the total annual cost of hiring a local employee to over $100,000, almost double their salary!

So, why is outstaffing a smart solution?

Outstaffing is a business model where companies hire professionals through a third-party provider, such as Zelh Logistics, which acts as the employer of record. This means the provider handles all the employment-related tasks (payroll, taxes, compliance), while the outstaffed team members work full-time for your business, just like your local employees.

Here's why outstaffing is a smarter, more cost-effective solution:

• Reduced labor costs

Outstaffing allows businesses to hire top talent from countries where labor costs are lower. For example, outstaffing professionals from Eastern Europe can cut labor costs by up to 50% without sacrificing quality. You still get highly skilled professionals but at a much lower rate than hiring locally. You can always check how much money you can save with Zelh Logistics by using our Calculator Tool.

• No office space or equipment costs

Because outstaffed employees work remotely, businesses can eliminate the costs of office rent, utilities, and equipment. Remote work has proven to be highly efficient, especially in logistics and IT services, where communication tools and project management software keep teams connected and productive.

• No recruitment or training hassles

When you choose outstaffing, the provider handles the entire recruitment and onboarding process. At Zelh Logistics, we rigorously vet candidates to ensure they meet your business needs. This saves you time and money on recruitment and training. Plus, outstaffed employees are often ready to hit the ground running with minimal onboarding.

• Flexibility and scalability

Outstaffing provides businesses with the flexibility to scale their workforce up or down depending on demand. If you need more support during peak seasons or special projects, outstaffing makes it easy to expand your team temporarily without committing to long-term hires. This agility is crucial in today's fast-moving logistics and operations environment.

• Access to global talent

With outstaffing, geographical boundaries are no longer a barrier to finding the best talent. You can hire professionals with specialized skills from anywhere in the world, giving your business a competitive edge. Zelh Logistics, for example, connects companies with highly qualified professionals in logistics, operations, IT, and customer service from a global pool of talent.

How did Zelh Logistics help Cut Costs for a Client?

One of our clients, a U.S.-based logistics company, faced rising labor costs and struggled to find skilled talent locally. They decided to partner with Zelh Logistics for outstaffing solutions.

We provided them with a remote team of logistics professionals from Eastern Europe, cutting their labor costs by 40%. Not only did the client save on salaries and benefits, but they also eliminated the need for office space and equipment. With our help, the client was able to onboard skilled staff within two weeks and improve operational efficiency, all while significantly reducing overhead.

Check the full case study via the link.

Conclusion

Local hiring can be expensive, with hidden costs piling up faster than expected. Outstaffing offers a smart alternative, allowing businesses to cut labor costs, access global talent, and maintain flexibility.

At Zelh Logistics, we specialize in providing outstaffing solutions tailored to your needs. Whether you want to fill logistics, IT, or operations roles, we can help you build a strong, efficient remote team. Contact Zelh Logistics today and discover how outstaffing can transform your business.

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